Should You Be Adding Indbank Merchant Banking Services (NSE:INDBANK) To Your Watchlist Today?

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Indbank Merchant Banking Services (NSE:INDBANK). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Indbank Merchant Banking Services with the means to add long-term value to shareholders.

See our latest analysis for Indbank Merchant Banking Services

Indbank Merchant Banking Services' Earnings Per Share Are Growing

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That means EPS growth is considered a real positive by most successful long-term investors. Indbank Merchant Banking Services' shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 44%. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. EBIT margins for Indbank Merchant Banking Services remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 13% to ₹120m. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Indbank Merchant Banking Services isn't a huge company, given its market capitalisation of ₹1.5b. That makes it extra important to check on its balance sheet strength.

Are Indbank Merchant Banking Services Insiders Aligned With All Shareholders?

It's a good habit to check into a company's remuneration policies to ensure that the CEO and management team aren't putting their own interests before that of the shareholder with excessive salary packages. For companies with market capitalisations under ₹17b, like Indbank Merchant Banking Services, the median CEO pay is around ₹3.6m.

Indbank Merchant Banking Services' CEO only received compensation totalling ₹1.5m in the year to March 2022. This could be considered a token amount, and indicates that the company does not need to use payment to motivate the CEO - that is often a good sign. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.

Should You Add Indbank Merchant Banking Services To Your Watchlist?

Indbank Merchant Banking Services' earnings per share have been soaring, with growth rates sky high. This appreciable increase in earnings could be a sign of an upward trajectory for the company. Meanwhile, the very reasonable CEO pay is a great reassurance, since it points to an absence of wasteful spending habits. So Indbank Merchant Banking Services looks like it could be a good quality growth stock, at first glance. That's worth watching. However, before you get too excited we've discovered 3 warning signs for Indbank Merchant Banking Services (1 is significant!) that you should be aware of.

Although Indbank Merchant Banking Services certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.